MONTREAL — Air Canada says uncertainty around pilot contact negotiations, which went down to the wire, helped push down revenue and passenger volumes in the airline's third quarter.
The new contract with pilots, which includes a cumulative 42 per cent wage hike over four years, is expected to put pressure on expenses next year, but chief executive Michael Rousseau said it was an achievement to reach a deal without having to go through a pilot strike.
"I am proud that we concluded a mutually beneficial agreement without significant disruption to customers and with a contained revenue impact," he said on an earnings call Friday.
The potential for travel disruptions offset a longer-term growth trend to see passenger volumes fall 0.1 per cent, while revenue was down four per cent to $6.11 billion.
"We saw multiple weeks of softer booking volumes as some customers postponed or cancel their itineraries while others chose to fly with other carriers," said Mark Galardo, executive vice president of revenue and network planning, on the call.
Profits were also impacted by competitive market pressure, along with lower demand to France because of the Olympics, but Galardo said overall the airline saw sustained strong international demand in the quarter.
The airline reported a profit of $2.04 billion, up from $1.25 billion in the same quarter last year, though that was significantly boosted by a one-time $1.15 billion income tax recovery in the quarter.
On an adjusted basis, Air Canada says it earned $2.57 per diluted share, down from an adjusted profit of $3.41 per diluted share a year earlier.
In its outlook, the airline says it now expects its capacity measured by available seat miles for 2024 to be up about five per cent from 2023 compared with earlier expectations for growth of 5.5 to 6.5 per cent.
Galardo said the reduction was because of a combination of supply chain pressures, aircraft availability and geopolitical pressures, while the airline will be watching to see if other factors push down demand.
"Although demand is strong, we'll be watching the effects from rising hotel costs and foreign exchange which may impact the coming winter season."
Air Canada also says it now expects its adjusted cost per available seat mile to be up about two per cent from 2023, compared with earlier expectations for growth of 2.5 to 3.5 per cent.
The airline has slightly boosted its earnings expectations for 2024, with adjusted earnings before interest, taxes, depreciation and amortization expected to total about $3.5 billion, up from earlier guidance for between $3.1 billion and $3.4 billion.
Air Canada also announced a share buyback program, which it said was to counter some of the share dilution the airline went through during the pandemic.
This report by The Canadian Press was first published Nov. 1, 2024.
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